Adrian Steel trial concludes

A $7.5 million disagreement remained for a judge to resolve after expert witnesses finished testifying Friday in Lenawee County Circuit Court on the value of Adrian Steel stock.

Three stockholders who objected to a 2011 forced sale to the company brought in experts who testified the value was more than double what they were paid. The difference in estimates of the stock value comes to about $7.5 million for three dissidents.

Stocks were repurchased by the company in a recapitalization plan that Adrian Steel chairman Harley Westfall said was intended to achieve his father’s dream of making the company private again. After founding the company in 1953, his father was forced to sell shares in 1961 when it struggled financially.

Angelo Gaggos of the Detroit area testified he bought some of the original stock in 1961 at $2.50 a share and bought more shares that became available over the next five to seven years.

“I thought it was a well-managed company. It was doing well,” Gaggos said. “I planned to hang onto it and leave it to my estate for my children and grandchildren.”

Being forced to sell his stock meant paying 15 percent capital gains tax on the 50-year increase in value. He said he paid “well over” $100,000 in taxes he had not expected to pay.

Gaggos said he would not hesitate to buy back the stock for the $426 a share he was paid.

“I would, because it’s worth two or two and a half times as much,” he told the court.

Richard De Rose, a business evaluation expert who came up with stock value for Adrian Steel in 2011, testified he later adjusted his opinion to $485 a share.

The fair value in 2011 was $1,107 a share, testified Ronald Seigneur, a business appraiser and certified public accountant hired by dissident stockholders.

It evolved from “meager beginnings” and has become very innovative in developing and marketing racks and cargo equipment for commercial vans and trucks, he said. The company’s policy of promoting from within has succeeded in creating stable and committed leadership.

“They’ve got people who know how to run the business and sell the product,” Seigneur said.

A second expert for the dissident stockholders agreed.

“At the time of the recapitalization this was a real gem of a company,” said Tara Stephenson, a Philadelphia investment banker.

Three methods she used to evaluate Adrian Steel produced stock price estimates between $870 and $1,294 per share, she said. Her opinion of the fair value of the stock in 2011 is $1,088 per share, Stephenson told the court.

Attorneys agreed to meet Tuesday with Judge Margaret M.S. Noe to go over exhibits being submitted in the case and schedule deadlines for submitting final briefs.

No one planned to make final oral arguments in court, said attorney John Koselka of Adrian, representing Adrian Steel. Noe is to issue a written decision after reviewing the briefs.

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